selecta Member
Joined: 24 Dec 2006 Posts: 813 Location: ORD
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Posted: Sun Jan 28, 2007 6:41 am Post subject: Worst side of American politics on display |
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Andrew Clark in New York
Friday January 26, 2007
Guardian Unlimited
source
The self-interested, small-town, worst side of American politics was on display on Capitol Hill when senators examined the prospect of a merger between two of the nation's biggest airlines.
US Airways wants to buy its bankrupt rival, Delta Airlines, for $10.3bn (£5.2bn) - and its hostile proposal has sparked a true humdinger of a squabble.
The bosses of both carriers were summoned before the senate's commerce committee to explain themselves this week.
Politicians queued up to complain that a tie-up could mean cuts in services to small airports in their own backyards.
"The inevitable will happen, which is to say that we're going to, you know, lose service and also, I think, [the outcome will] result in higher prices," said Olympia Snowe, a Republican from Maine.
Her question was echoed repeatedly by senators from both parties, many of whom represented rural states such as West Virginia, North Dakota and Hawaii.
Since the terrorist attacks of September 11, there have been 24 bankruptcy filings by airlines in America but only five carriers have actually gone into liquidation.
The industry has lost $34bn yet the country still has six big network airlines - American, United, Continental, US, Delta and Northwest.
The former Continental boss Gordon Bethune told the Wall Street Journal this month that the industry was "dysfunctional", with too many carriers kept alive by executive ego and by political interests.
He is right - for example, while under court protection from their creditors, American carriers have been free to offer rock-bottom fares across the Atlantic posing unfair competition for European rivals.
Cost cutting to the bone has made flying within America a cheerless experience similar to a trip on Ryanair - but far more expensive.
In most cases, there are no free drinks, meals, headphones or blankets. There are even fees for sitting in an exit row.
US Airways' boss Doug Parker says a deal would yield $1.65bn of annual cost savings by eliminating duplicated flights and administration.
He says a financially stable carrier would be far more likely to sustain services to remote areas in states such as Senator Snowe's north-eastern stronghold. His comments are credible - after all, given their parlous financial situations, why on earth would any of the existing stand-alone airlines be serving cities that aren't financially attractive?
Inevitably, staff from Atlanta-based Delta are worried that a merger would put their jobs at risk.
They are waging a spirited "Keep Delta My Delta" campaign and uniformed crew turned up in force to the Senate hearing.
The proposal will live or die next week, when Delta's creditors meet to consider whether they support it. But irrespective of the outcome, Parker has done the industry a favour.
Delta has been press-ganged into discussions with another possible partner, Northwest, and a flurry of talks have happened elsewhere - including a possible tie-up between Midwest and Air Tran and reported talks between United and Continental.
European flag carriers have been just as reluctant to recognise reality. But as KLM and Air France accepted four years ago and Alitalia looks set to learn the hard way, the world needs fewer - but stronger - airlines. _________________
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